SENATE BUDGET AND APPROPRIATIONS COMMITTEE

STATEMENT TO

SENATE, No. 1759

STATE OF NEW JERSEY

DATED:  JUNE 4, 2026

      The Senate Budget and Appropriations Committee reports favorably Senate Bill No. 1759.

      As reported, this bill amends the “Property Tax Deduction Act,” (C.54A:3A-15 et seq.) to provide additional tax relief for property taxpayers by increasing, from 18 percent to 30 percent, the amount of rent defined as “rent constituting property taxes,” and increasing, from $50 to $250, the property tax credit that certain individuals may elect to receive in lieu of an income tax deduction.

      Under the “Property Tax Deduction Act,” a taxpayer is entitled to a deduction of up to $15,000 from gross income for property taxes, or the rental equivalent thereof paid by tenants, due and paid for that calendar year on a taxpayer’s homestead.  For tenants, the amount of the deduction is based on the amount of “rent constituting property taxes.”  Current law sets the amount of rent constituting property taxes at 18 percent of the rent paid by the taxpayer during the taxable year, for a unit of residential real property, which the taxpayer occupies as a principal residence.  This bill increases the amount of rent constituting property taxes from 18 percent of rent paid to 30 percent of rent paid.

      Increasing the limitation on the amount of rental payments defined as “rent constituting property taxes” would allow eligible gross income taxpayers to deduct a higher amount of rent from their gross income, thereby lowering the amount of the taxpayer’s gross income subject to taxation and reducing a tenant’s tax burden.

      The bill also increases, from $50 to $250, the property tax credit that certain individuals who paid property taxes or rent constituting property taxes may elect to receive instead of the gross income tax deduction.  This credit is available to State gross income taxpayers, as well as residents who are 65 years of age or older or who are allowed to claim a personal deduction as a blind or disabled taxpayer, but who are not subject to gross income taxation.

FISCAL IMPACT:

      The Office of Legislative Services (OLS) estimates that this bill will reduce annual State revenues deposited into the Property Tax Relief Fund by approximately $127.2 million to $231.5 million by increasing the amount of rent constituting property taxes that certain taxpayers may deduct from taxable income under the gross income tax.  For the purposes of this analysis, the OLS estimates that roughly 1.1 million renter households will benefit from increasing the amount of rent constituting property taxes from 18 percent to 30 percent.

      In lieu of claiming a deduction for rent constituting property taxes paid in a taxable year, current law allows certain taxpayers to claim a gross income tax credit of up to $50.  By increasing the maximum credit to $250, the OLS estimates that the bill will cause approximately 170,000 renters, with monthly rents below $1,000, to elect to claim the increased gross income tax credit instead of the deduction.